Persistent fast growth and profitability

Fast growth firms are a recent political objective given their impact on economic dynamics. Notwithstanding this, there is no unanimity in the literature on their determinants and impact and many aspects remain open questions. Several analyses consider growth and fast growth a random event, without possibility of prediction and policy action. This paper intends to contribute to the current large debate, looking at the characters of growth episodes (spell), type and persistence, and how they impact on firms' profitability. We focus on a sample of medium-sized firms included in CHEETAH database, whose main characteristics is to have experienced at least one episode of fast growth, according to the OECD definition, in at least one of the cohorts of three years considered of 2008-2011, 2009-2012 and 2010-2013. We develop a descriptive analysis of how firms evolve over time from their starting level of turnover growth and the estimation of how different trajectories of growth (more persistent versus episodic) influence firm's profitability through a panel regression. Our hypothesis that fast growth persistence makes a positive difference in terms of firms' profitability is confirmed.